Many of you will have seen an email from USS about impending changes to our pension scheme. The bottom line is that members of USS and employers are going to be required to increase their contributions to the scheme from April 2019 onwards in order to secure the level of benefits in retirement they’ve been promised. This will result in a 3 – 4 % increase in your contributions by April 2020.
Nick Hardy, Pensions Officer for University of Birmingham UCU Branch, has produced a more detailed explanation of the changes. Please read on to find out more.
Dear BUCU members,
Many of you will have seen an email about USS about impending changes to the scheme. The bottom line is that members of USS and employers are going to be required to increase their contributions to the scheme from April 2019 onwards in order to secure the level of benefits in retirement they’ve been promised.
The new contribution rates have been set for the current valuation cycle only – so they will last only from 2019-2022. The increases in percentage terms are as follows:
- Current rates: 18% employers/8% members
- April 2019-October 2019: 19.5% employers/8.8% members
- October 2019-April 2020: 22.5% employers/10.4% members
- April 2020 until the next valuation: 24.9% employers/11.7% members
There is a rough modeller, produced not by USS but by a member, which will tell you how much extra you are likely to pay per month based on your salary. Please follow the link below to access it:
USS pension cost sharing modeller
Background to the proposed changes
Many of you will know that UCU suspended its nationwide strike in April because Universities UK (UUK), the body negotiating on behalf of employers, agreed to establish a Joint Expert Panel (JEP) to discuss the methods and assumptions by which USS is valued and the size of the surplus or deficit is determined.
The hope was that the JEP would form a much more positive assessment of the size of the Scheme’s deficit than USS itself had formed, so that the Scheme could keep providing the same benefits to members without having to make any drastic changes. However, at the same time as the strike ended and UCU and UUK started setting up the JEP, USS decided that it had to press on and make changes to contributions anyway.
USS’s argument is that the ‘deficit’, which it still believes in very firmly, needs urgently to be addressed and that USS will get in trouble with the Pensions Regulator if it just sits on its hands while the JEP is doing its work. The contribution increases which USS has imposed are the only option available to it: it’s a sort of ‘backstop’ that exists in the scheme rules in case UCU and UUK haven’t reached an agreement over changes to the scheme.
However, it is likely that the increases will not be in place for long. The JEP will issue its first report in September. After that, UCU and UUK will use its conclusions to try to reach a new deal – hopefully a better one than we have been offered so far. If a deal is reached by early 2019, it can be implemented in time for the April 2020-2021 financial year. In that event, the worst of the contribution increases will be avoided.
I hope this helps members who are understandably confused by these developments. There is a lot more I could say, but I’ll leave it there for now. The next big step in this dispute will be in late September, when the JEP issues its first report and UUK and UCU have to start negotiating over a new deal to replace these contribution increases. In the meantime, if you have any questions relating to pensions, please don’t hesitate to email me at firstname.lastname@example.org.
Finally, since the strike I have been involved in an initiative called USS Briefs, which some of you will be familiar with, providing information and analysis to UCU members: for example, we were the first to break news of these contribution increases, two weeks before they were formally announced by USS. You can see what we’ve been up to by clicking the links in my signature, below.
Pensions Officer (Elect), University of Birmingham UCU Branch
Editor, USS Briefs: Website | Medium | Soundcloud | iTunes podcasts | Twitter | Facebook
Image: “British Money and magnify glass” by Images Money is licensed under CC BY 2.0